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Internet banking: The latest hoopla

Know the Score

Posted: April 26, 2008 1:57 p.m.
Updated: June 27, 2008 5:02 a.m.
 
It seems that we've all gotten so busy that "clicks to bricks" (what Internet banking is called) has become the way to go. There are many entrepreneurs who are still a bit skeptical about it, so I decided that I'd give you the scoop.

Like any business decision, this will take some investigation on your part before you dive head first into banking on the Internet. I'll give you some tips for doing your "due diligence" before you start.

Also, be aware that there are a number of banks that don't have brick and mortar locations, but are strictly doing business via the Internet and many offer some tempting rates and deals.

It's up to you whether you stay with your brick and mortar bank and just set-up Internet access with them or try a more attractive bank online. In either case, due diligence is required - and remember if it sounds too good to be true, it usually is.

Getting started
Let's start with how to start using Internet banking with your own brick and mortar bank. Internet banking has become so widely used now that you can usually go to the bank name on the Internet. You'd go to http://www.bankofamerica.com, for example, and if you can register online, you'll see all the instructions there on their site. If not, then call the bank and ask to register for their online banking services. They will send you the information you need by mail. It will explain how to log onto the Internet banking Web site, and it will contain a unique username. Usually this username will not change.

The letter will also advise you on security issues and it will explain requirements such as that you have 128-bit encryption on your computer. (If you've done any buying on the Internet before now, you probably already know that you meet this requirement.) It might also counsel you to type in the bank's URL carefully to avoid phony Web sites that are setup to get your information.

The next letter that you get will be one with your temporary password.

It will also give you instructions on how to change your password. It will tell about the various security tokens you have to choose, such as images and captions. Then it will tell you how to sign on to the bank's site and begin Internet banking.

If you're going to use a virtual bank (one ONLY on the Internet with no brick and mortar location) the process is a little different. To begin, you must first open an Internet banking account with the virtual bank. You choose the virtual bank from the offers you've investigated on the Internet. Many considerations are the same as with bricks and mortar banks. You want to make sure they are FDIC insured.

You'll be interested in their interest rates on savings accounts, loans, and certain checking accounts. It might be necessary to even know the bank's overdraft fees.

You'll be wise to read any information they have on their rules and procedures. It may be dull reading, but it can be important to you.

You need to know what your rights are and what the bank expects of you. You'll be asked to agree to these terms so print them off the computer and keep them in your files.

Once you choose a virtual bank, you will set up your account by starting at the bank's Web site. Make sure it is the reputable virtual bank you have investigated before you give your personal information or send any money. Right here I think we ought to digress a moment and learn how to confirm that an Internet banking company is legitimate - then I can explain the "getting started" process.

Precautions
When you set up your first "virtual" Internet banking account you should have reservations about it. After all, anyone could set up a Web site, claim to be a bank and fraudulently take your money. There are some precautions you can take to be sure they are legit.

Start by going to the bank's Web site. There you can get the information the bank gives you about their banking credentials. The bank's official name should be listed. There may be articles describing the history of the bank, including their Internet banking history. There should be an address where the headquarters can be found. There will be a base of operations somewhere, even if it is a virtual bank with Internet banking operation. If they are on the up-and-up, they'll not be hesitant to tell you about their FDIC coverage.

It's easy to check a bank's FDIC insurance if you see the words "FDIC Insured" or "Member FDIC" or the FDIC logo, by going to the source.

The FDIC has its own data base that includes all of the banking institutions, including Internet banking companies that are covered by FDIC insurance. Go to the "Bank Find" site to find out if your bank is one of them. You can start your search with the name of the bank or its address.

If your Internet banking company is on that list, the FDIC will provide you with a whole list of helpful information. You'll learn when the bank became insured, and the number on its certificate, the
location(s) of your bank and its official name. You will find out what government entity regulates the bank.

If it doesn't appear on the list, it's time to go directly to the FDIC. They will be concerned with the legitimacy and safety of that bank. It's probably not wise to put your money in an uninsured bank, and at that point it's better to look for another Internet banking operation.

Now that you've done your due diligence with the virtual bank that you've chosen you will set up your account. Start at their Web site where they will let you choose a username and password (within certain parameters). Then you can get down to the business of starting your Internet banking account which starts with some input from you. You'll give all the usual information that you would give to any bank where you set up an account. Common questions are your name, address, phone number, your social security number and your place of employment. Then you'll send the virtual Internet banking company some form of deposit to get the ball rolling.

Once you do sign up with your online bank be cautious about how you use their Internet banking Web site. Some unscrupulous people will use the Internet to get your banking information when you log onto your bank's Web site. The trick they use is to set up a Web site that looks like your bank's Web site and use a URL that is very similar to your bank's URL. They bet on you making a mistake when you login, like typing in a misspelling and they are well versed in what common mistakes are made and they've used that to determine their phony URL to the look-alike Web site they've set up. From there they will track all the information you type into the opening page such as your user name, your password and any other information you type. Be very careful when typing in their site address.

Banking 24/7
When you have yourself all set up to do Internet banking you can start making transactions with the click of your mouse. The advantage is that you can do it at 2 a.m. if need be and you aren't bound by the brick and mortar business hours. Next week we'll look at some of the advantages, problems and bill paying using the Internet banking method.

Commentary by Dr. Maureen Stephenson, a local author and owner of REMS Publishing & Publicity. Her column represents her own views, and not necessarily those of The Signal.

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